7.1 Public or private? Or mixed?

Who has responsibility for the supply system, and how it should be structured, are important choices with many political and economic ramifications. It is very important that the drug policy defines the future supply system and the role of the government. There are several options, and which one is chosen will depend on existing structures, the balance between public and private sectors, and other factors.

In some countries problems with the central medical stores and the public supply system have been overcome by contracting some of the work out to private operators while maintaining a centralized structure. For example, the transport of drugs can often be left to the private sector. In other countries different structures are used. An autonomous or semi-autonomous agency is set up to serve as a supply agency not directly managed by the government. The objective of such a system is to combine the efficiency of the private sector with the public health approach and the economies of scale that can be achieved in a centralized system.

Further options include direct delivery systems or primary distributor systems. In a direct delivery system drug prices are established by tender, but drugs are supplied directly to facilities. A primary distributor system is one in which contracts are negotiated with a single prime vendor who supplies and distributes directly to districts or major facilities.8

A well-coordinated supply system will ensure that public funds available for drug purchases are used effectively to maximize access, to obtain good value for money and to avoid waste. This will increase confidence in health services and promote attendance by patients. There needs to be good coordination between these central elements of the supply system. Failures at any point of the drug supply system can lead to shortages or to waste. Both the health and the economic consequences can be serious.

The choice of policy on the future drug supply system touches upon many vested interests and discussions on this subject tend to be heated and long. However, it is important for the government to consider all options very carefully and to take an informed decision on long-term policy before embarking on new activities (sometimes with donor funds), such as setting up regional stores.